Saving money for down payments on a home or another large purchase can oftentimes be challenging. The financial requirements of everyday life can interfere with saving money, especially those unexpected requirements such as car repairs or medical emergencies. It can leave you feeling as though there is no way you can achieve your savings target. However, there is always a way to achieve your financial goals, and with some smart financial decisions you can save up for that down payment quicker than you think.
Here are 5 ways to save money and achieve your financial goals.
Partner With A Financial Advisor
A financial advisor is invested in helping you achieve your financial goals. They will answer any questions regarding finances you may have and help you improve your financial literacy. They will also help you invest your money wisely so you can achieve your goals sooner.
Understanding what expenses are considered a need versus a want versus a nice to have is important when looking to save money. Needs should be prioritized above wants, and nice to have should be pretty much eliminated. Prioritization also comes in with your wants, as you should cut back on unnecessary expenses while still enjoying life. Achieving your long-term financial goal of saving for your large purchase or for a deposit on a home, should be a priority as well.
If you’re intending to purchase your first home, you can withdraw up to $25,000 from your RRSP. This is an excellent approach to help save for a down payment, and it can help avoid financial distress. Not only will investing in an RRSP help to lower the total taxes you will need to pay at the end of the year, but you can also pay back the money to your RRSP in annual installments. You should discuss with your financial advisor for additional information on how withdrawing money from your RRSP for purchasing your first home will benefit you.
Tax-Free Savings Account
A tax-free savings account is a great solution for saving for a down payment. Your invested money can grow and accrue interest, tax-free. You won’t be responsible to pay any taxes on the growth of the money in this account. Your financial advisor can cover the nuances of this method of saving for your home’s down payment.
Pay Off High-Interest Debts
With today’s low-interest rates, you may be tempted to continue paying off the minimum payments on what you owe. It is important that you compare the amount your interest paid on your debts versus the amount of interest earned on your savings. Begin by paying off the higher interest debts first, this will allow you to pay down the principle quicker, and save on interest fees. Another benefit of paying off your debt is when the time comes to apply for a mortgage, you wouldn’t want past purchases to interfere with your approval.
When saving for a down payment for a home or saving for any other large purchase becomes a priority, you need to formulate a plan to achieve this goal. It is a good idea to have a professional on your side, start by partnering with a reliable financial advisor who can help you achieve your financial goals. Together put a plan in place, follow the plan, and achieve your targets.